Circular reasoning. Forbonnais and the intricate history of circular flow analysis in the 1750s.

Circular flow analysis in mid-18th century France is normally associated with the writings of François Quesnay. From the early 1750 s, however, François Véron de Forbonnais developed a distinct theory of circulation in then well-known contributions to the Encyclopédie and his Elémens du commerce of 1754. This article argues that like Quesnay, Forbonnais was in part inspired by Cantillon's Essay on the Nature of Trade in General. But while Quesnay gave original developments to the real aspects of Cantillon"s analysis of circulation, Forbonnais focussed on developing monetary aspects, including arguments for the 'non-neutrality' of money and an original theory of the money interest rate. [ABSTRACT FROM AUTHOR]